Hirose News|April 23, 2012 10:19 AM

FX Weekly Update

<Dollar /Yen>



The dollar stopped falling in the daily Ichimoku cloud after failing to form a double top at 84's against the Yen, and then broke over the high limit of the daily cloud. This rise has been caused by an expectation for additional monetary easing policy at the April 27 policy meeting of BOJ, making oversea market sell the Yen.


Nevertheless, a change of bank rates and an upward adjustment for 1% CPI inflation's goal is not likely to happen. Even if the asset-purchase program expands from ¥65 trillion to ¥70 trillion, 0~0.1% call rate is not going to be changed.

However, since this is already factored into the price (some news even said that ¥100trillion has been proposed), if BOJ does nothing, the scale of monetary easing will be much smaller and greenback selling (Yen buying) is likely to happen. Because of the existing net short positions in the Yen there is still room for Yen buying. Therefore, we should look out for a greenback slide.

Expected range 80.10-82.50  Be careful of the unwinding of selling positions of the Yen





Although the Euro has rebounded from 1.3000 after a failure of a head and shoulder's formation with the head at 1.3485, it fell again after a double top formed ahead of 1.3400. It rebounding to the daily Ichimoku cloud, however, after breaking below 1.3000 to 1.2975.


In the short term, as the IFO business climate index is better than forecast (and the IMF gets a$400billion commitment), the euro is likely to climb. Moreover, since the euro has climbed to 1.3220, even it were to fall below 1.3000 it is likely to find support. Despite the net short position in the euro has increased by 16761 to 118125, the price break above the 21 days MA and the high limit of daily Ichimoku cloud, all point to 1.34 taking out stops above 1.33. Instead of getting heavy inside the daily cloud, the euro is more likely to climb this week.

Expected range 1.3050-1.3380.  Buy on dips early of the week. Pay attention to the unwinding of sell positions.

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